Tag Archives: commercial real estate risk management
Federal banking agencies are urging commercial real estate lenders to maintain prudent risk-management practices, warning that they will intensify oversight of commercial real estate lending practices in 2016.
In a statement seen as a “stark warning” to commercial real estate lenders, the federal agencies noted that many commercial real estate asset and lending markets have experienced substantial growth, increased competitive pressures, escalating commercial real estate concentrations in banks, and a lessening of commercial real estate underwriting standards, according to a new report from the CoStar Group.
The agencies specifically called attention to the higher concentration levels of commercial real estate loans at many banks as a result of the reassuring trends in asset-quality metrics, CoStar said.
This has caused competitive pressures to rise and commercial real estate underwriting standards to lessen, including less-restrictive loan covenants, extended maturities, longer interest-only payment periods, and limited guarantor requirements, CoStar noted in the news report.
The agencies also noted concern about specific commercial real estate risk management practices at some institutions, including an increase in the number of underwriting policy exceptions and inadequate monitoring of market conditions to properly assess risks linked to the concentrations.
The agencies reinforced existing guidelines for commercial real estate risk management, urging institutions to preserve underwriting discipline and perform risk-management practices “to identify, measure, monitor, and manage the risks arising from CRE lending,” according to the news report. The agencies also advised lenders to adhere to risk-management practices and maintain capital that is appropriate to the level and nature of their commercial real estate concentration risk, CoStar reported.
In 2016, the banking agencies said they would review commercial real estate lending activities, paying particular attention to banks that have undergone recent significant growth in commercial real estate lending, or institutions whose lending strategies include plans to substantially increase commercial real estate lending activities. Institutions that operate in markets or loan segments with increasing growth or risk fundamentals also will come under closer scrutiny, according to the CoStar news report.
The statement noted that banks found to have deficient commercial real estate risk management practices and capital strategies may be required to “develop a plan to identify, measure, monitor, and manage CRE concentrations, to reduce risk tolerances in their commercial real estate underwriting standards or to raise additional capital to mitigate the risk associated with their CRE strategies or exposures,” CoStar reported.
For more information about Philly office space, Philly retail space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (firstname.lastname@example.org) Leor Hemo (email@example.com) or Lee Fein (firstname.lastname@example.org) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate brokerage firm with expertise in Philly office space and Philly retail space.
Wolf Commercial Real Estate is a Philadelphia commercial real estate broker that provides a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.
Wolf Commercial Real Estate, a Philadelphia commercial real estate broker that specializes in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space or Philly retail space with the Philadelphia commercial properties that best meets their needs. As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philly office space or Philly retail space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.
Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.